South Korea's film financing sector faces grave challenges,yet paradoxically may rank as the world's most vibrant, according to opinionsexpressed at a panel discussion at the Pusan International Film Festival.
Titled "A Study on Korean Film Financing", the seminarcanvassed the opinions of local industry representatives including KimJangwook, Executive VP of Show East (OldBoy); Choi Jae-won, CEO of investment company iPictures (
Moderator Kim Hyae-joon of the Korean Film Council openedwith an observation that despite the fact that revenues for Korean films havequadupled since 1999, the average production still posts an ultimate loss of7%.
Furthermore, venture capital firms and other privateinvestors have suffered much higher losses on average thanvertically-integrated film studios such as CJ Entertainment or Showbox.
Accountant Im Ho-chul argued that spiralling productioncosts and local exhibitors' habit of paying out only 50% of box-office revenuesfor local films (compared to 60% for imports) have handicapped financiers.
"In my opinion, the Korean film industry does not realisethe importance of investors," he said.
Meanwhile Choi Jae-won pointed out that many of thecountry's large number of film investment funds, to which government agenciesusually contribute 30-50%, are set to expire in the coming year. "These funds have been tremendouslyimportant financial resources for film companies, but given the low level ofreturns, I'm worried that investors will not participate in the next round offunds."
Yet Rob Aft argued that negative investment potential is aninescapable part of the film industry."A -7% investment return on film is actually higher than that inHollywood, India, Hong Kong, or anywhere else in the world."
Most important is that investors understand potential risks,Aft said, and that a legal system is in place to support them. "People need to have some recourse if theythink they've been cheated, or if their money has been diverted to otherends. Without this in place, the filmfinancing sector will ultimately suffer."